A new Illinois medical malpractice law is winning only measured support from the insurance industry, which is voicing concern about some provisions.
The bill, S.B. 475, was signed into law by Gov. Rod Blagojevich this week. It creates new caps on non-economic damage awards and permits the state to deny rate increases.
The bill limits non-economic damages for all plaintiffs in any civil action to $1 million from a hospital and $500,000 from a physician or health care professional. The hospital provision encompasses the liability for all its personnel and affiliates.
The law goes into effect immediately.
The provision that upsets the industry the most requires the state Department of Financial and Professional Regulation to collect and make available the actuarial data that insurers use to create rates.
The law says that if an insurer requests an increase of more than 6 percent, a public hearing must be held to determine whether the raise is justified. It also gives the secretary of the department the authority to adjust the increase if such a change is deemed appropriate.
The Property Casualty Insurers Association of America expressed "mixed emotions" about the impact of the bill, saying it will both "help and hurt state consumers."
"The bottom line is that much more work is needed to reform that state's medical liability crisis, and unfortunately this bill is not the answer," said Greg LaCost, regional manager and counsel for PCI.
"This bill goes in the opposite direction relative to rate modernization and sends a message that Illinois wants insurance carriers but perhaps not medical malpractice carriers," he added.
Moreover, he said, "the governor's comments about 'marching against the carriers' further aggravates the matter."
Steve Schneider, a vice president for the American Insurance Association's Midwest region, added that "more can be done to help keep doctors in Illinois."
He explained that while the caps on non-economic damages are a "welcome provision," additional liability reforms should be considered to provide more stability in the market and offset the onerous insurance regulations that will do little to encourage insurers to re-enter Illinois.
Moreover, Mr. Schneider said, "the state's medical malpractice insurance market will likely remain in a state of 'status quo' for some time because of the threat of judicial invalidation of the law and the normal marketplace adjustment period seen after a new law is enacted."
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